Advances in Economics, Business and Management Research, volume 203

Proceedings of the 2021 3rd International Conference on Economic Management and

Cultural Industry (ICEMCI 2021)

The Effectiveness of Brand Culture on Customer

Engagement
A Case Study of Spotify in the U.S.
Shukun Yin1, †, Lintong Fu2, *, †
1
Management and Marketing, Dulwich International High School Suzhou, Suzhou, Jiangsu Province, China
2
Bishop Alemany High School, Shenyang, Liaoning Province, China
*
Corresponding author Email: guanghua.ren@gecacademy.cn
†
These authors contributed equally.

ABSTRACT
Spotify is a Swedish digital music streaming service and technology company founded in 2006 by Daniel Ek. In the
US market, Spotify is the most predominant audio streaming service among its competitors. The primary purpose of
this research was to explore how Spotify took advantage of its branding culture to deliberately orient or mediate its
customer engagement. This research would develop preceding case studies related to customer engagement and
Spotify's branding strategies to draw a general correlation. Although psychological factors of the consumers might
affect their engagement to a certain extent, the research concludes the personalized customer experience of Spotify has
strengthened the relationship between the application and consumers, attracting more non-members to subscribe to the
premium service offered by Spotify. From Spotify's data-driven service, a particular customized playlist would be
recommended to the users. People tend to be touched by music and such emotional interactions, leading to a sense of
resonation and inspiration to them. Besides, artists and other music content creators could better comprehend the
streaming media data of their works through the analytic database from Spotify. The adhesiveness of users would be
valued. Thus, Spotify's brand culture and marketing tactics have to render part of its consumers become advocates,
extensively spreading word-of-mouth recommendations of Spotify's benefits. In short, this research aims to provide an
enlightening indication of Spotify's prospective developing orientation, which might be facilitated customer-oriented
innovativeness.

Keywords: Spotify, music social platform, brand culture, customer engagement, case study, SWOT

1. Introduction a result, Spotify, with the awareness of copyrights for

audio resources, incepted in 2008 and totalled over 200
In the past two decades, the era of music streaming million users worldwide [1].
service has been dramatically modified and improved
The successful story of Spotify intrigues people
due to digitalization [1]. Essentially speaking, the
about Spotify's business model. It is noticeable that
advent of Spotify in the twenty-first century coincides
Spotify adopted a membership subscription model for
with the broader need than ever for quality and
its customers, with the price 9.99/12.99 dollars per
serviceable music streaming service. More people
month and after. Although its premium service has
incrementally devoted their time to aesthetic audio
provided a mass of outstanding functions (Figure 1),
creation, and music, videos, and podcasts seem
there have always been continuous critiques about this
beneficial in diversifying the majority's cultural life.
initiative business model. People would complain about
Under such an urgent demand by the epoch, Spotify
the payment is unfair or might affect the sale of physical
succeeded in appealing to uncountable new users with
albums [1].
their utilitarian functions and abundant music library. As

Copyright © 2021 The Authors. Published by Atlantis Press International B.V.

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Figure 1 What's New with Spotify Premium
Although criticism remains, artists, musicians, and
music amateurs are immersed in Spotify's marketing
concepts. They seek interaction and protection on their
copyrights, leading to the phenomenal success of
Spotify in the technology industry. Undoubtedly, some
aspects of Spotify have already been examined and
analyzed. For instance, Spotify's innovativeness is based
on the data collected from their consumers' preferences
[2], and Spotify's long-term goals of not just being a
music provider but also a data broker is not just a
streaming service but a technical institution [3]. Also,
studies focus on Spotify's core tactic: Personalization
and Customization, which show support for a
relationship between personalization marketing and
customer loyalty/customer satisfaction [2]. This research
on day-to-day bases and subsequent consequences has
enabled scholars to draw out various conclusions on the
relationship between customer engagement and
innovation and the prominent traits and attributions of
Spotify, which attracted abundant artists and induced
plentiful customers.
Despite the past years have seen increasingly rapid
advances in the field of data-analyzed innovations, as
the introduction of Spotify has helped countless people
to enjoy immersed music experience and indulge in
creating new music content [5], there is further
confusion about the influence of brand culture itself
instead of its business model. There are no better cases
than Spotify to be analyzed based on its brand culture
because a critical number of consumers of Spotify are
millennials aged 19 to 28. These young consumers
highly value the perceptions of branding and customized
experiences since previous studies have shown young
customers were attracted by personalized advertising
conducted by the video streaming platform YouTube
[6]. Nevertheless, other studies have failed to evaluate
the factor of brand culture, which resembles
digitalization trends. Thus, this research based on
evaluating the relationship between Spotify's brand
culture and customer engagement would effectively
cover the gaps of the aforementioned case studies. This
research investigated a number of certain correlated
research focused on the relation between the
independent variable ---- brand culture and the
dependent variable ---- customer engagement. Through
those case studies, we would conclude rational
assumptions and suitable models for that specific
relation. These discoveries would facilitate prospective
research on how artistic creation being affected by
Spotify's brand culture [5] and how Spotify's brand
culture would give the public a better awareness of their
perspective direction of innovativeness and
data-collecting.
In the following context, this research would firstly
contribute a literature review on some particular
keywords, e.g., Customer Engagement. Then, it will
mention the basic methods of analysis and evaluation of
previous case studies. Based on those findings, there
will be a further understanding of Spotify's branding
strategies, factors affecting Spotify's brand positioning,
and a conclusion and interpretation. Also, pictures and
tables, including essential information, will be shown.
After paragraphs on results and discussion, this research
paper will end with a general conclusion of its
evaluation and importance. The conclusion will indicate
suggestions for future expectations on Spotify's brand
culture and its customer engagement.
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2. LITERATURE REVIEW
Literature review research on customer engagement
and brand culture. Based on the research question, how
Spotify's brand culture affects its customer engagement
in the US online market, the article will explore the
relevant theory between Spotify and customers, and
their relationship.
2.1 Customer Engagement
Customer engagement (CE) has become a hot topic
among researchers because it has proven to keep
customers engaged. Many researchers have associated
consumer interaction with mobile phone apps and
digital media, because modern and alternative marketing
mediums have gained traction compared to conventional
marketing strategies [3]. The extended domain of
relational marketing (RM) theory is generally
recognized as the philosophical roots of CE; however,
much of the RM literature focuses on current consumer
habits that represent positive interactions and,
eventually, customer loyalty [7]. Therefore, CE is
becoming more widely accepted as a favorable
condition, with businesses employing a variety of
mechanisms to influence customer perceptions in the
absence of actual experience with the company's service
or product offering [8]. CE represents the cognitive,
emotional, and behavioral outcomes linked to an
immersive experience, and this may express itself in a
positive susceptibility to the company's offering.
Engagement has been defined as "task behaviors that
promote connections to work and to others," which
increase consumers' motivation, physically, cognitively,
emotionally [9].
The process of CE includes the establishment of a
state of guarantee for new customers, which is thought
to be a primarily cognitive basis for purchase. Then,
increased levels of participation are accompanied by
increased levels of success among consumers who make
repeat purchases [10]. Consequently, the evolution of
affective attachment to the service brand, which is
thought, will be a more emotionally charged reason for
buying and can eventually result in sustained brand
loyalty [11]. Bowden considers "CE" to be a
"psychological mechanism" that includes both cognitive
and emotional elements [12]. In 2011, the engagement
definition tended to be typified by a "who engages with
what" viewpoint, which focuses on the engagement
subject/object. Engagement may also be formed over
time as a mechanism reflecting a sequence of
aggregated states [13].
2.2 Brand Culture
Brand culture refers to the combination of various
elements such as logo, design, background, and
equality. These cultural characters and phenomena are
composed of interest understanding, cultural traditions,
emotional qualities, and personal images [14]. More
recent attention has focused on engagement, as the
future concept related to a brand's reputation, which
considers consumption power, expected to predict a
brand's future, also including loyalty [15]. Customer
experience can be gained by social media information
technology as a way to enable and promote the customer
experience. We know CE is largely based upon
empirical studies investigating how customers obtain
different experiences through engagement. Whether it is
satisfied or disappointing, it is always an important
component of CE. Personality, honesty, and a brand's
spirit are all factors that influence the service and the
number of customers; the affective loyalty relationship
with the business online will show the degree of CE,
and building relationships with consumers necessitates
data on the customer [16].
Based on the reviews, the article considered that CE
is customer understands of psychological dedication to
an active relationship with the brand, as embodied by
the website or other computer-mediated sources that
convey brand value as the support to consider Spotify
move on the case study.
3. METHOD
3.1 History of Spotify
Spotify is a digital music service that offers music
from major and independent music companies. Users of
Spotify have the option of subscribing to a "Freemium"
model with advertising or paying a fee to gain access to
additional features without advertisements. Spotify
expects sales of $10.8 billion in 2020, with a $696
million operating loss. Daniel Ek and Martin Lorentzon
formed Spotify in Stockholm, Sweden, in 2006.
According to Ek, Lorentzon's name was shouted, and
the company's name was misheard. Later, they devised
an etymology based on the words "spot" and "identify."
Spotify was launched on October 7, 2008, with a
free service for its music listeners. Still, with
advertisements, it collaborated with Universal Music
Group, Sony BMG, Warner Music Group, and others in
the same year [17]. Apple had already approved
Spotify's inclusion in the App Store at this stage; the
year 2010 was a significant moment for Spotify, like
Mark Zuckerberg, the founder of Facebook, committed
to a Facebook-Spotify collaboration [18]. Also, Sean
Parker, the co-founder of Napster, joined Spotify's board
of directors in 2011 and raised $100 million to help the
company launch in the United States, and they've finally
released an app for Android smartphones this year [19].
Spotify continued to grow, and by 2015, it had amassed
a total of 25 billion hours of music that the business
rebranded to include more music and clips among its
offerings. It launched in 13 new markets in the Middle
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East and South Africa in 2018, and the Arabic area
playlist was added to the app [20].
3.2 Research Design
This paper will use a qualitative research method
based on the SWOT, which comprises strength,
weakness, opportunity, and threat. SWOT often appears
in the case study because researchers used SWOT
analysis. After all, utilized SWOT analysis can
understand Spotify completely from its positive section
to its negative, and it often shows readers a clear
purpose.
3.3 Strength of Spotify
Researchers considered that Spotify is the pioneer of
the streaming music service because of its durability,
consistency, and a large range of music material and
audiobooks and podcasts. It has a majority of the current
market share and the largest share of music streaming
subscribers worldwide. Spotify had 155 million
premium subscribers worldwide in the fourth quarter of
2020, up from 124 million in the fourth quarter of 2019
[21]. In the United States, online music services account
for 80% of music sales, and Spotify has a 36% share of
the global music streaming market.
Also, Spotify is always a leader of the future in this
field of the market; however, from its logo design,
colorway chooses or functions. Spotify can be accessed
via a number of devices. Many people listen to music on
their phones or computers, but Spotify can also be used
on game consoles, Bluetooth speakers, smartwatches,
and other devices. About 20% of Americans listen to
Spotify at least once a week.
3.4 Weakness of Spotify
Spotify must pay a number of entities in addition to
its own operational costs to be able to include songs on
its website, and these fees are made to a variety of
entities. A part of the money goes to the artists, but most
go to their labels, distributors, publishers, copyright
holders, and others. Royalty fees accounted for 74.54
percent of Spotify's sales in 2019 [22].
Spotify, at its roots, isn't all that different from other
related services. They all have a catalog of material that
they make accessible to their users in exchange for a
fee. The gap is in the premium features and brand
image, and while Spotify appears to have cracked the
customer loyalty code, the pattern may change over
time. When any time a song is downloaded, streaming
music services pay a small amount of money, which
means that thousands of streams are needed to equal any
significant payout. Spotify pays less than many of its
competitors, leading to removing certain artists' music
from the website, such as Taylor Swift.
3.5 Opportunities of Spotify
Spotify has Spotify for Podcasters, which gives
Spotify users reports, marketing promo cards,
podcasting tools, and advanced tips. The number of
people listening to Spotify podcasts increased by 200
percent year over year in 2019. In 2020, Spotify was the
most popular app for listening to podcasts in the United
States; there were approximately 88 million podcast
listeners in the United States in 2019, with listeners
expected to exceed 160 million in 2023 [23]. Spotify
started experimenting with video podcasts in July 2020.
A stronger drive into this type of media could open up a
whole new product and revenue. Spotify will depend on
its brand and popularity to gain access to this coveted
spot in the video streaming industry, which is already a
competitive market.
Many networks have wrapped with the mobile
phone, Internet, and other technology providers, usually
in the form of free or discounted premium tier access for
a limited period. Spotify has already established
agreements with Samsung, Facebook, Xbox, and
Vodafone, among others, and will benefit from
continuing to do so.
3.6 Threats of Spotify
The business has put growth ahead of profits, and it
has been losing money year after year. Although it made
a profit at one stage in 2019, it lost money at the end of
the year. From 2016 to 2019, Spotify's net losses were
USD 660 million, USD 1,513 million, USD 96 million,
and USD 228 million, respectively [24].
Spotify competes with a variety of companies, some
of which are great companies. Apple Music and
YouTube Music, which had previously concentrated on
other fields, have joined the music streaming market.
Pandora, Google Play Music, and SoundCloud, among
others, are competitors of Spotify.
Spotify has been chastised by several musicians,
who have removed their music from the website due to
unsatisfactory payouts. Spotify's licensing deals with
artists including Neil Young, Taylor Swift, and
Radiohead have been terminated due to disagreements
about the size of their payouts. Users may perceive this
as an unfair business practice, despite their preference
for Spotify's other artists and features.
4. RESULTS
Through artificial intelligence, Spotify would collect
day-to-day data from users' listening habits and provide
a personalized playlist including music, podcasts
suitable for different users.
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Figure 2: Spotify 2020 Wrapped
Spotify introduced 2020 Wrapped in December 2020
(Figure 2), a yearly conclusive list of songs including
most streamed songs of specific consumers and top
trendy songs played worldwide, Spotify has managed to
set the highly acclaimed features on behalf of
consumer's preferences. Spotify has emphasized a
deeper dive for its consumers into podcasts listening and
listeners in different regions to explore their Missed Hits
and their top artists of 2020 in On Record [24].
(Figure3)
Figure 3: Spotify: For the Record
Like aforementioned, a great proportion of Spotify's
successful brand perceptions from its consumers is its
customized listening experience. Besides, Spotify has
successfully moulded its brand culture of innovation and
collaboration by setting strategic branding tactics for
customers to materialize their emotions and feelings
about music. Take Spotify's tagline, "Music for Every
Mood," as an example. This piece of sentence illustrates
the primary specialty of Spotify, relating to mood, a
sentimental statement, to an audio existence, which
tends to be expressive. This unique brand culture has
positively affected customer's emotional engagement
with the content of Spotify. Apart from cognitive
thinking, another factor that helps determine the final
decision to purchase Spotify's premium service is
customers' emotional thinking, explaining why Spotify
would achieve tremendous success among American
youngsters. Referring to Maslow's hierarchy of needs,
the researchers reckon that the case of Spotify could set
an explementary idea of brand positioning for the need
of self-actualization, leave alone their high quality of
music content and promise of authentic music
copyrights,
In short, all these customized branding strategies and
listening models are superior experiences for Spotify's
listeners. The users could have predicted their
recommended songs from Spotify's analytic model [23],
and non-users of Spotify could still discover the latest in
Spotify's global listening trends from the 2020
Wrapped. The special personalization part of Spotify's
brand culture has benefitted non-users at the same time
and amplified the potential to attract those non-users to
subscribe to a premium membership.
Apart from the listener, referring to people who
mainly consume music content instead of contributing
output, artists and musicians are also benefited by
Spotify's brand culture. They are therefore better
engaged with the platform to help with their creating
innovativeness [1]. Artists could find data about the
streams and sales of their music content straightforward
through Spotify's data-based service. They would make
sensible predictions about consumer's inclination and
improve a better innovative way of creating audios.
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Figure 4: Spotify's core values
Furthermore, Spotify has acclaimed its brand core
values as innovative, collaborative, sincere, passionate,
and playful. All the crew and employers behind
Spotify's branding have dedicated their mobility of
innovativeness to the streaming service market [25], and
people see them as pioneers in the industry. As a result,
more listeners and artists can find resonations between
them individuals with the branding perceptions. This is
the way of spiritual and psychological interaction
between Spotify's brand culture and its users. Spotify
has succeeded positioned itself to help fulfil people's
self-actualization, the top layer of Maslow's needs
hierarchy [26]. That explains one thing that also makes
an actual impact on customer engagement, which is
Spotify's tagline "Music for every Mood".
5. CONCLUSION
Researchers have presented Spotify based on the
SWOT analysis that how Spotify's brand culture affects
its customer engagement in the US online market.
Researchers identified that brand culture affects
customer engagement depend on Spotify's strong
reputation. Spotify has more control in setting listener
standards and shaping the music streaming experience
alone with the more subscribers it has. Spotify has the
market share to control how people listen to music and
what features are available, with new users joining
every day. While Spotify was not the first to market
with a music streaming service, it rapidly gained market
share in the US due to its superior quality. CE can be
influenced by brand culture by brand culture is
composed of little pieces such as logo, design, symbol,
among others, and CE is anything that customer relates
to the brand. No matter what customers do with the
brand. Therefore, brand culture and CE happens
together. Moreover, Spotify is not the only one that can
offer special functions; its competitors have the same
service as well. Spotify is not perfect right now. There
are still many countries that Spotify is not available such
as China. Due to the different cultures and traditions
background, whether Spotify will fit these unexploited
countries' environment is still questionable.
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